Estimating the Duration of Economic Losses in Wrongful Termination Cases
A recent article in the Journal of Legal Economics summarizes the many studies that have been done over the years which address the issue of how to measure the duration and magnitude of earnings lost when a worker loses his/her job. In particular, the article seeks insight into instances of wrongful employment termination (as opposed to, say, a mass layoff of workers). In general, there is consensus in these studies that workers who lose a job tend to incur both short- and long-term declines in earnings. Although much of the research has focused on workers terminated in mass layoffs, the author draws parallels to the situation faced by a terminated employee. For instance, neither “termination” is the result of a voluntary separation. Additionally, “a wrongfully terminated worker carries the ‘stigma’ of being terminated,” making it more difficult to re-gain employment. Further, wrongfully discharged workers may experience adverse selection bias as prospective employers tend to avoid hiring unemployed workers. Evidence gathered during recent recessions indicates that workers who lose their job during economic downturns are more likely to experience prolonged and deeper declines in their earnings.
(If you would like to review this article – “Estimating Duration of Economic Damages in Wrongful Termination Cases: Recent Literature on Duration and Magnitude of Earnings Losses from Job Loss” – please contact Dr. Boisso at (214) 394-3165 or Dale@BoissoAndAssociates.com.)